Currency refers to a medium of exchange that derives its value based on the authority responsible for its regulation and circulation within a specific geographical location.
It encompasses various forms of money that are currently in use as a means of facilitating transactions. This includes banknotes and coins, which serve as tangible representations of currency.
Additionally, currency can also refer to the monetary system adopted by a nation and commonly used by its people.
From Coins and Bills to Cryptocurrencies
Essentially, currency represents the paper and coin money a country employs for conducting business transactions.
In the realm of cryptocurrencies, currencies are discussed in two primary categories:
- Cryptocurrencies are digital or virtual forms of currency that are secured using cryptographic techniques, making them highly resistant to counterfeiting and double-spending. Many cryptocurrencies operate on decentralized blockchain networks, which function as distributed ledgers enforced by a global network of computers.
- Fiat currencies: Fiat currencies, also known as fiat money, are government-issued currencies not backed by a physical commodity like gold or silver. Fiat money gives central banks more significant control over the economy as they can regulate the amount of currency in circulation.